Zoho has accused Freshworks of accessing its database on purpose without authorisation and obtaining information through one of Freshworks’ employees.

Zoho and Freshworks
Atom SaaS Thursday, November 26, 2020 - 16:21

Chennai-based SaaS startup Zoho has filed another complaint against its rival Freshworks in a US district court. According to the Economic Times, Zoho accused Freshworks of accessing its database on purpose without authorisation and obtaining information through one of Freshworks’ employees. 

The company has also reportedly asked for a formal discovery process, a formal process of exchanging information into how much unauthorised access Freshworks has allegedly had and to investigate if more employees have done something similar. 

The two poster boys of the Software-As-A-Service (SaaS) industry in India have been locked in a legal battle for a long time, and in March, Zoho Corp filed a lawsuit against Freshworks for ‘Trade Secret Misappropriation’, also in the US.

It should be noted that the founders of Freshworks, Girish Mathrubootham and Shan Krishnasamy, are former employees of Zoho. At the time, it had accused Freshworks of building its business by stealing and misusing Zoho’s financial information, and of poaching employees. 

Four months later, in August, Freshworks filed a plea for the complaint to be dismissed, stating that Zoho’s petition lacked "specificity and particularity" about the allegations. It had said that Zoho had grounds for its allegation that a (now former) Freshworks employee accessed the database many times, but the case can be limited to that of a single employee. Ravikumar is reportedly not with Freshworks anymore.

In October, the US district court in the Northern District of California denied the motion to dismiss the complaint and said that Zoho has “clearly met the standard for pleading trade secret misappropriation.”

“Zoho claims only that Freshworks misappropriated one trade secret—the CRM. And it provides one detailed example of how Freshworks used the trade secret, which involved the actions of one Freshworks employee," it stated. "The fact that the complaint gives one example does not mean that the more general allegations require dismissal,” the order added.  

It also added that some Freshworks’ arguments about allegations don’t deal specifically with allegations about Ravikumar’s unauthorised use of CRM data would not state a claim of misappropriation of trade secrets don’t stand on their own. 

The order stated that Freshworks seems to be attempting to limit the scope of discovery.

“The claim is that Freshworks—not just Ravikumar—had access to and used Zoho’s trade secret. Although the Court will (at least initially) impose a temporal limit on discovery requests to events no earlier than January 1, 2018, it would not be appropriate to limit discovery to the activities of a single employee, as Freshworks seems to suggest,” the order stated. This is what Zoho also reportedly asks for in its new complaint. 

Reportedly, at the time, Zoho was directed to file a fresh complaint, and Freshworks would get time till December 7 to respond. 

In its current complaint, the former employee reportedly admitted under oath that he got access to Zoho’s CRM and uploaded spreadsheets to Freshworks’ CRM, which included 4,000 leads taken from Zoho’s CRM, according to ET.

Zoho refused to comment on the matter as it is sub-judice.